Mixed landscape forecast for world medium-voltage motors market in 2015

Mixed landscape forecast for world medium-voltage motors market in 2015 with an expected uptick in growth globally in the medium to long term.

Shirly Zhu, IHS Technology

07/08/2015

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The performance of the market for medium-voltage (MV) motors is linked closely to the performance of its end-user industries as well as global economic conditions. The significance of these two factors has never been more apparent than in the last few years as the world economy continues to improve from a global recession that has been compounded by problems in the still-recovering Eurozone economy, a marked slowdown in the Chinese economy, a variety of geopolitical problems, oil prices falling steeply, a global mining downturn, and the like.

All three regions are faced with different economic difficulties, which are expected to be offset by the overall market landscape in the medium to long term. Facing the problem of the Greek debt crisis, the Eurozone’s delayed recovery is forecast to eventually gain momentum, aided by monetary stimulus, euro depreciation and pent-up demand. Despite the Chinese economic slowdown, India, another major Asia-Pacific economy, is expected to lead regional (as well as global) growth with a projected 7.5% growth in GDP in 2015. In the American region, the US economy is being supported by acceleration in consumer spending and homebuilding, while Latin American countries are struggling against economic recession, including Venezuela, Argentina and Brazil.

Looking forward, the global economy is forecast to persevere and eventually resume growth. As such, dynamic capital investment activities are foreseen to boost the demand for MV motors.

The world medium-voltage motors market is estimated to have been worth $5.7 billion in 2014; IHS forecasts the market to decline slightly by 1.9% in 2015 to $5.6 billion, but then grow at a revenue CAGR of 3.6% from 2014 to 2019, achieving a market size of $6.8 billion in 2019. Across the three regions, Asia Pacific is estimated to have contributed to the most revenues in 2014 at nearly $2.7 billion. The region is also predicted to outperform the global market average in regards to a revenue CAGR of 3.8% during the same timeframe. Despite the setback of a projected 3.2% contraction in 2015, IHS predicts American market growth to outpace that of the EMEA market with a revenue CAGR of 3.6% to reach nearly $1.8 billion in 2019. In addition, China, the world’s largest country market for MV motors, is forecast to hold its market–leading position in 2019 with close to $2.1 billion in revenues equating to a 30.8% market share, albeit the share is down from 31% in 2014. The US market was the world’s second-largest cuntry market in 2014, with estimated revenues of $902.0 million; the market is predicted to remain the world’s second largest in 2019 with nearly $1.1 billion in revenues.

The sharp decline of oil prices is subsiding, and end-market demands are expected to increase, albeit with varying industry performance

The industry sectors of oil and natural gas, power generation, metals and mining were top consumers of MV motors in 2014, accounting for 22.3% ($1.3 billion), 16.2% ($923.0 million), 13.3% ($757.9 million) and 11.4% ($651.7 million) of the market, respectively, in 2014. Furthermore, there is substantial variance in industry sector performances across the three regions. For instance, in 2014 EMEA was the largest consumer of MV motors in the oil and gas sector and Asia Pacific was the largest market for power generation and metals. In addition, medium-voltage motor suppliers often have their own well-known specialized products or downstream industries apart from top suppliers, like ABB and Siemens, which have strong presence in various fields with comprehensive product portfolios. For example, the top Chinese MV motor supplier in 2014, Shanghai Electric Motor, has a strong presence in the power generation and metals markets in Asia Pacific.

Over the forecast period, the chemical, power generation, and water and wastewater subsectors are predicted to grow at different rates, though each is forecast to outperform average total sector growth during the forecast period at CAGRs of 4.6%, 5.0% and 5.5%, respectively. On the other hand, the subsectors of cement, metals, mining, oil and gas, pulp and paper are forecast to underperform the average total sector growth at CAGRs of 3.0%, 3.2%, 1.8%, 2.9% and 2.6%, respectively.

The market landscape by industry is forecast to change as a result of growth among various subsectors during the forecast period. Power generation is predicted to strengthen its position as the top subsector, accounting for 17.3% (or $1.2 billion) of the market in 2019. In addition, the chemical, water and wastewater, and commercial marine subsectors are projected to increase market share to account for 8.1%, 6.6% and 7.6%, respectively. On the other hand, the oil and natural gas sector is forecast to decline by 0.8 percentage points to 21.5% of total revenues despite remaining the largest subsector in 2019. The cement, metals, mining and pulp and paper subsectors are projected to shrink in size over the forecast period with relatively lower CAGRs of 4.6%, 13.0%, 10.4% and 1.4%, respectively.- Shirly Zhu, is an analyst for industrial automation, at IHS Technology, providing information on the market for medium voltage motors. IHS Technology is a CFE Media content partner. Edited by Joy Chang, digital project manager, CFE Media, jchang@cfemedia.com.

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